Excel Wear Etc vs Union Of India (SC 1978)

Excel Wear is a partnership firm manufacturing garments for export. About400 workmen were employed in the petitioners’ factory. The case of the petitioners is that the relations between the management and the employees started deteriorating and became very strained from The workmen became very militant, aggressive, violent and indulged in unjustifiable or illegal strikes. The petitioners claim that as a result it became almost impossible to carry on the business.

The petitioners, therefore, served a notice dated 2nd May, 1977 on the Government of Maharashtra for approval of closure of the undertaking The State Government refused to accord the approval on the ground that the intended closure was prejudicial to public interest.

The petitioners contended:

(a) A right to close down a business is an integral part of the right to carry on a business guaranteed under Art. 19 The impugned law imposes a restriction on the said fundamental right which is highly unreasonable, excessive and It is not a restriction but almost amounts to the destruction or negation of that right.

(b) A right to carry on a business includes a right not to carry on a business which is like any other right mentioned under Article 19(1)

(c) The restrictions are unreasonable because- (i) Section 25(o) does not require giving of reasons in the order. (ii) No time limit is to he fixed while refusing permission to close down. (iii)Even if the reasons are adequate and sufficient, approval can be denied in the purported public interest of security of Labour is bound to suffer because of unemployment brought about in almost every case of closure. (iv) It has been left to the caprice and whims of the authority to decide one way or the other. No guidelines have been given.

The workers contended that the restrictions imposed by the impugned law are quite reasonable and justified to put a stop to the unfair labour practice and for the welfare of the It is a progressive legislation for the protection of a weaker section of society.

The workers also did not accept that a right to close down a business is an integral part of the right to carry on any According to them, the total prohibition of closure only affects a part of the right to carry on the business and nota total annihilation of this. The restriction imposed was in public interest and there is a presumption of reasonableness in favour of a statute.

The SC agreed with the workers and held that the right to close down a business cannot be equated with a right not to start or carry on n business at all. The extreme proposition urged on behalf of the employer by equating the two rights and placing them at par is not sound. If one does not start a business at all, then perhaps under no circumstances, he can be compelled to start one. Under no circumstances, a person can be compelled to speak, to form an association or to acquire or hold a property.

But by imposing reasonable restrictions, he can be compelled not to speak, not to form an association or not to acquire or not to hold property. A total prohibition of business is possible by putting reasonable restrictions under Article 19(6) on the right to carry on a business. However, the greater the restriction, the more the need for strict scrutiny by the Court.

The SC agreed with the workers and held that the right to close down a business cannot be equated with a right not to start or carry on n business at all. The extreme proposition urged on behalf of the employer by equating the two rights and placing them at par is not sound. If one does not start a business at all, then perhaps under no circumstances, he can be compelled to start one. Under no circumstances, a person can be compelled to speak, to form an association or to acquire or hold a property.

But by imposing reasonable restrictions, he can be compelled not to speak, not to form an association or not to acquire or not to hold property. A total prohibition of business is possible by putting reasonable restrictions under Article 19(6) on the right to carry on a business. However, the greater the restriction, the more the need for strict scrutiny by the Court.